How an Outhouse and Schizophrenia Led to Financial Independence
Part 2/2
$2,500 Saved When I met Dan
The best thing I found from the Center was my lifelong companion. Dan and I were meant for each other as we were on the same social, psychological and financial wavelengths. We had no money except the $2,500 that I had saved, two old VWs and some furniture—that’s it. Since we were young and had little in material things, we were a compatible fit. Two years into our relationship, we used my $2,500 for a down payment for our first house, and a piece of rental property. We were frugal and made decisions together from the beginning, and that alone was responsible for staying together for 40 years until his sudden death in 2015.
Returning to college at age 28 after dropping out ten years earlier was intimidating, but I learned to love it. I met two mentors that were helpful for my long-term success. After graduating college at age 30, I began a professional career as a drug-abuse counselor and later a teacher.
While I am no math genius, as a psych major, I took many statistic classes. I learned about the scientific process and the importance of understanding how data can be used to misinform. I published my master’s thesis in a prestigious psychological journal. My knowledge about psychology, the research process, and statistics helped me understand investing. While the science and the practice of clinical psychology was fascinating and exciting, that job market was unpredictable.
After an unemployment period during the early 1980s with part-time temporary positions, I found my career. I began teaching at the Los Angeles Unified School District. Entering the teaching career was the first of two major life decisions that I had not planned (The other was learning to invest).
After my first year, which is roughest for most teachers, I learned to love teaching. During this period, I learned another valuable skill that has helped me address life’s many challenges including retirement—reinventing myself and taking on the retirement financial establishment.
It wasn’t until I started teaching that I could plan for retirement. I started saving for retirement through my employer’s tax-deferred retirement plan at the ripe young age of 37. I started with the most commonly sold retirement product—a fixed annuity from an insurance company—the Tax-shelter Annuity (TSA). About five years into my teaching career, I found out another painful lesson–I got ripped off because I could not transfer my money into another investment. This annoying experience forced me to discover and learn the investment process. I hadn’t planned on that either.
Financial Misperceptions
The side effect of learning to invest is as important as was a college education. Money is the resource that makes things happen. Many of the investment books report the same observation: most people know more about buying a kitchen toaster than selecting an investment. When I taught my elementary students about money, the first response was “Las Vegas!”
People often think that earning high wages, inheriting a bundle, striking it big in Las Vegas or winning the lottery is the answer to financial needs. Nothing could be further from the truth. Books have been written that report 75% of lottery winners are broke within a few years. Even when people win big, they often fail to keep their winnings. How tragic.
Learning from Negative Financial Experience
After the 2007-2009 financial crisis, many Americans were rightfully angry at the financial profession and institutions for the losses to our retirement savings. People were forced into paying more attention to their money. Millions did not trust their financial adviser or financial institutions to protect their wealth. Millions more kept their money in overly safe money market accounts and missed out on all the huge gains in the stock and bond markets since 2008.
Dan and I already prepared. We painfully learned from our losses suffered during the tech bubble and crash eight years before. We diversified our portfolio and so we were ready for any stock market crash even the big one in 2008.
The print media often reports that during recessions, the public spends less, keep their used car longer and start saving more. My economic situation as a young adult positioned me in my “personal” recession. I made barely above minimum wage at the time. Yet, I supported myself, rented an apartment, and lived with roommates to live within my means. It was the typical single lifestyle in a big city like Los Angeles.
The Blogosphere contains Hundreds of Web sites Written by Frugal Living People
Living within one’s means is as powerful a force as it ever was in human history. Think about it. Because I lived and survived within my means, I never borrowed money from family or friends. Uncontrolled debt is a serious issue that is wholly debilitating and unnecessary.*** I was lucky that I felt good paying my bills on time and was comfortable because I was in control of my life.
I was motivated to save, and borrowing money meant that I would have to pay back. What if I didn’t have the money? It was so much easier to live within my means because to borrow was out of the question.
I learned these valuable lessons not because I sought them out, but because of my childhood and young adult was forced into frugal living. I was well-aware that others were better-off than me. Los Angeles is a big city with thousands of talented people and intimidating for a newly arrived self-effacing, scared of my own shadow, shy farm kid from Wisconsin.
I am not the only one encouraging people to live within their means. Its recorded just about everywhere in cyberspace, investment discussion forums, and in many finance books. The most famous blog is Mr. Money Mustache who writes endlessly about frugal living. He has 12 million views on his blog! He must be saying something right. But he is not the only one.
The now famous book Millionaire Next Door demystified the misperception that most American millionaires are born into wealth. In their study of how people became millionaires and multimillionaires, it’s not how much they made or how much they inherited; it’s what they did with the money they earned. American millionaires did not fall for the alluring but fake wealth image of big homes, new cars, private schools for their children, and the latest electronic gadgets.
Summary
On the surface, the outhouse and psychology have little connection with investing. My outhouse experience helped me never to forget where I am from and how lucky I am to be living the lifestyle I live now. But to get here that outhouse reminded me to live in modest homes, so I could continue to save a little. With my disturbed older brother, that initially motivated me to find out more about myself and find the love of my young life, my late hubby, Dan. Psychology also helped both Dan and I ignore the emotional laden media distractions and our emotions to ride out stock markets crashes and stick with our portfolio plan, no matter what.
I considered myself to be fortunate that I took on these life challenges by remembering and reconnecting with my family of origin experiences: the outhouse, my troubled brother, and learning to invest. My parents and grandparents have no idea of my lifestyle in the 21st Century. I am extremely lucky that I found the second love of my life, Georgiana, and to know how to manage my comfortable portfolio and to be able to do the things I love, such as writing this blog, do interesting things with Georgiana, volunteer, take dancing lessons, and donate to worthy causes. My retirement experiences are possible because I learned to find meaning in all experiences whether positive or negative and end up finding what most people want—financial independence.
***A severe illness, death, or natural disaster during working years and without proper insurance is the primary cause of household bankruptcies. However, most serious debt obligations come from making bad financial decisions and/or mate selections, which can be avoided with education and coaching about how wealth builds and couples making decisions together. Spending addiction can be overwhelming and subtle that many people and couples need extra help to change spending addiction. Read my review of the book, “Your Money or Your Life,” which addresses how to change difficult financial decision-making behaviors to achieve worthwhile goals.
Steve’s Bio
Stephen A. Schullo, Ph.D. (UCLA ’96) taught in the Los Angeles Unified School District (LAUSD) for 24 years and UCLA Extension teaching educational technology to student teachers. Steve wrote investment articles for the United Teacher-Los Angeles (UTLA) newspaper for 13 years. Thrice featured retirement plan advocate in the Los Angeles Times and U.S. News and World Report. He co-founded an investor self-help group 403bAware for teacher colleagues and wrote 7,500 posts in three investment forums since 1997. Frequently quoted by the media, testified at California State legislative hearings and honored with the “Unsung Hero” award by UTLA for his retirement planning advocacy.
For the last twelve years, he serves on LAUSD’s Investment Advisory Committee as a “Member-at-Large” and former co-chair. The committee contains collective bargaining reps from the unions and monitors the district’s tax-deferred retirement plans, 457b/403b, of 55,000 former and current LAUSD employees, worth $2.5 billion in total assets.